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Regulatory actions taken by the Central Bank of Sri Lanka on The Finance Company PLC

The Finance Company PLC (TFC), a Finance Company licensed under the Finance Business Act No. 42 of 2011 (FBA) was severely impacted by the failure of a number of financial institutions within the Ceylinco Group in 2008. Since then the financial status of the company deteriorated gradually, leading to a severe liquidity crisis. Although, several efforts were made to identify prospective investors and to restructure the company, such efforts have not materialized to a satisfactory level yet.

Inflation increased in September 2019

Headline inflation as measured by the year-on-year change in the National Consumer Price Index (NCPI, 2013=100)  increased to 5.0 per cent in September 2019 from 3.4 per cent in August 2019. The monthly increases of prices of items in both Food and Non-food categories contributed to this increase as reflected in year-on-year Food and Non-food inflation recording 4.9 per cent and 5.1 per cent respectively in September 2019. In addition, the low base that prevailed in the corresponding month of the previous year also contributed for this increase.

The Financial Action Task Force delisted Sri Lanka from the Grey List

The Financial Action Task Force (FATF), the global policy setter on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), has delisted Sri Lanka from FATF’s Compliance Document which is more commonly identified as “the Grey List”. The decision was taken at the FATF Plenary held during 13-18 October 2019 in Paris.

Financial Intelligence Unit of Sri Lanka Entered into an Agreement with INTERPOL National Central Bureau for Sri Lanka

In terms of the provisions of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA), the Financial Intelligence Unit (FIU) of Sri Lanka entered into an agreement with INTERPOL National Central Bureau for Sri Lanka (NCB Colombo) on October 11, 2019 at the Central Bank of Sri Lanka to obtain direct access to the INTERPOL Information System.

Senior Deputy Inspector General of Police, Head of NCB Colombo, Mr. D W R B Seneviratne and Mr. D M Rupasinghe, Director, FIU signed the agreement on behalf of the respective institutions in the presence of Dr. Indrajit Coomaraswamy, the Governor of the Central Bank of Sri Lanka, who is also the Chairman of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) National Coordinating Committee and Mr. C D Wickramaratne, Acting Inspector General of Police.

Sri Lanka Purchasing Managers’ Index - September 2019

Manufacturing activities expanded at a slower rate in September 2019, recording an index value of 54.7 which is a decrease of 1.9 index points, compared to August 2019. This slowdown in manufacturing PMI was mainly driven by the slowdown in Production and New Orders during the month of September. Slowdown in Production could be observed, especially in manufacturing of food & beverages and textiles & wearing apparel sectors. Although the New Orders and Production expanded at a slower rate, the Stock of Purchases was increased significantly with the anticipation of high demand in future especially in manufacturing of food & beverages sector.

External Sector Performance - August 2019

The trade deficit contracted in August 2019 as the decline in imports continued while the dip in exports in the previous month has largely recovered. Import expenditure recorded a decline of 16.6 per cent (year-on-year) and export earnings declined fractionally by 0.4 per cent (year-on-year) in August 2019, mainly due to the lower prices of major export categories.

The trade deficit fell to US dollars 540 million in August 2019 compared to the deficit of US dollars 717 million recorded in July 2019.

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